Lori Parham Forced into the Medicare doughnut hole

Thursday

May 28, 2009 at 11:57 AM

Millions of older Americans are living full and vibrant lives because of today’s wonderful advances in health care, including powerful medicines. But costs are high: One in two Americans say someone in their family skipped pills, or postponed or cut back on needed medical care due to costs. One in five Medicare beneficiaries across the nation delayed or did not fill a prescription under the Part D Medicare drug benefit because of cost; higher than any other insured group.

As Congress moves forward on health reform this year, AARP is working to close the coverage gap, or “doughnut hole.” in the Medicare prescription drug benefit.

There were more than 1,800 Part D plans nationwide in 2008, and provisions vary widely. Most plans pay the cost of prescription drugs listed on a formulary, or approved list of covered drugs, minus varying copays.

But once your drug costs reach certain levels, you fall into the doughnut hole, and must pay the full cost of your prescriptions. You keep paying until you reach the upper limit of the doughnut hole, which is set for most beneficiaries at $4,350 in 2009. After that, Part D’s “catastrophic coverage” pays most of the cost of your prescriptions.

Disturbingly, more and more older Americans fall into the doughnut hole. According to a 2008 AARP study, drug costs are rising 7.4 percent per year, compared to 2.9 percent for overall inflation. The doughnut hole is expanding faster than older Americans’ incomes can keep up. In 2007, 3.4 million Medicare beneficiaries fell into the doughnut hole.

Special subsidies help Medicare beneficiaries who meet certain asset tests and whose income is 150 percent of the federal poverty level or less ($16,245 for individuals, $21,855 for couples). But too many low-income Americans are being forced into the doughnut hole because they did the right thing and saved a small nest egg for retirement.

AARP believes Congress should begin to close the doughnut hole in Medicare Part D. Options include changing how drug benefit costs are calculated or freezing the dollar limit of the doughnut hole at its current level.

AARP also is working to lower the cost of prescription drugs for all generations of Americans. AARP supports lowering drug prices through safe importation of drugs; expanding drug price negotiation; and allowing companies to develop generic equivalents for some drugs, such as those called “biologics.” Created to treat diseases such as cancer, multiple sclerosis, and rheumatoid arthritis, these drugs often cost 10, 15 or even 20 times more than most non-biologic drugs.

AARP supports creating a pathway, similar to that for traditional prescription drugs, for the approval of generic and comparable biologic drugs, as well as a process for timely patent dispute resolution.

America’s health system costs too much, wastes too much and leaves too many without care. To maintain America’s health care system, revitalize our slumping economy and ensure health security for all generations, we need action now on health reform.

To add your voice to the growing chorus seeking common-sense, bipartisan solutions to the health crisis, go to www.healthactionnow.org or call 1-866-595-7678. Lori K. Parham is AARP’s Florida state director.

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